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Amazon’s Next Price War?

Thinking of having a promotion or a sale on your website to help you sell some books? Now think again, for any attempt to promote your own business might cost you one of your deepest revenue streams.

Amazon’s latest ‘our way or the highway’ policy involves independent third-party sellers on their European websites. The same stranglehold Amazon has on publishers is now being placed on independent booksellers.

Amazon’s New Rule:

Any book listed on Amazon must be sold at the same price or cheaper than it appears on any other website including the booksellers’ own websites.

Any bookseller found in violation is subject to removal from the marketplace.

The Independent Online Booksellers Association (IOBA), which represents more than 250 booksellers, has sent a letter to various EU and European officials objecting to Amazon’s new ‘price parity’ policy calling it “dangerously anti-competitive.”

Perhaps the old Net Book Agreement, which from 1900-1997 set the price at which a book was sold to the public in the UK, should be renamed the Amazon Book Agreement.

Here is the letter in its entirety:

Dear Sir/Madam,

I am writing to you on behalf of the Independent Online Booksellers’ Association (IOBA) to express our concern about recent moves by Amazon to force independent booksellers to set prices on Amazon’s UK, French and German websites equal to or lower than on any other sites which sellers use to sell their books. The IOBA believes Amazon’s demands for ‘price parity’ to be an anti-competitive measure by the dominant online marketplace for new and used books designed to undermine smaller competitor websites and even independent booksellers’ own websites.

The IOBA is an organization which represents more than 250 independent online booksellers around the world. While the majority of our members are based in the US, we currently have about 20 members based in the UK, France and Germany who are directly affected by Amazon’s latest policy change. The IOBA also runs IOBAbooks — one of the small aggregator websites which are likely to be adversely affected by this move. By way of background, Amazon’s Marketplace is an aggregator website through which thousands of independent businesses (including booksellers) can offer their goods for sale to the general public. In this latest policy change, Amazon have contacted independent sellers using their UK, French and German websites and said that any items they have for sale on Amazon must be sold at the same price or cheaper on Amazon than they are sold on any other website including booksellers’ own websites. This policy change has been backed up with a threat to ban any seller who fails to comply from selling on Amazon’s sites.

Most independent online booksellers sell their books on several different websites to generate sufficient sales. These often include aggregator sites like Amazon, Alibris, Biblio etc and, in many cases, their own independent websites. However, for many sellers, Amazon — as the largest and best known marketplace of its kind — generates a significant proportion of their income.

Aggregator sites usually generate income by charging booksellers commission on any sales generated through their sites and, in some cases, from monthly subscriptions. A typical ‘Pro-Merchant’ subscription to use Amazon’s UK website for instance costs £25 per month plus commission on any sales made.

This means that the costs faced by many booksellers to sell books via Amazon are often higher than on many other websites and often substantially higher than selling books through their own independent websites. However, under Amazon’s new policy, booksellers are forbidden from reflecting those differences in costs by pricing items cheaper on websites on which they are charged less to list their books. In addition, under this policy, booksellers would be forbidden from, for instance, having a 25% off sale on books on their own independent website as this would breach Amazon’s price parity ruling and risk the seller being thrown off Amazon and hence losing a substantial proportion of their income.

It seems to us here at the IOBA that Amazon’s policy of forcing sellers to reflect the higher costs involved in listing items for sale on Amazon across all websites is likely to be bad for book-buyers by generally increasing the cost of books, and is likely to be particularly damaging to smaller, cheaper aggregator site competitors to Amazon’s market dominance.

This policy also removes the freedom from independent booksellers to set the prices that they want for books on their own independent websites and, as highlighted above, to offer sales and other special offers to their own customers on their own websites.

As a result, the IOBA believes that this latest move by Amazon is dangerously anti-competitive, designed to use its market dominance to undermine smaller competitors and independent booksellers and will inevitably lead to a worse deal for book buyers.

Hence the IOBA would like to call on the relevant authorities in the UK, France, Germany and the European Union to examine this latest move by Amazon with a view to ruling on the legitimacy of the site to use its market dominance in this way.

Thank you for taking the time and trouble to read this letter. If you have any further questions then please feel free to contact me at this email address.

Yours faithfully,

Karin Isgur Bergsagel

President, Independent Online Booksellers Association

How long until the same rules apply to listing on the Advanced Book Exchange (ABE), the leading non-new book marketplace, and an Amazon owned company?

Note: This is a seattlepi.com reader blog. It is not written or edited by the P-I. The authors are solely responsible for content. E-mail us at newmedia@seattlepi.com if you consider a post inappropriate.